Charles Grassley, chairman of the US Senate Committee on Finance, has called for an inquiry to be launched into the pharmaceutical and biotechnology industries after a report in The Seattle Times alleged that drug researchers were selling information to Wall Street.
An investigation carried out by the reporters identified “at least” 26 cases of doctors disclosing confidential information to powerful investment banks on Wall Street, including – it is alleged – Citigroup Smith Barney and UBS. And, in 24 of these cases, the firms concerned then issued a report to select clients advising them whether to buy or sell their stock.
The practice principally concerns hedge funds - private, unregulated investment funds for wealthy investors where minimum investments typically begin at $1 million – looking to make profits in the more volatile biotechnology market. According to The Seattle Times, this makes physicians’ secrets so valuable that investors are willing to pay so-called “matchmaker” firms up to $1 million every year to gain access to doctors involved in clinical research, who typically receive between $300 and $500 dollars per hour for their troubles.
And again this comes back to haunt the already beleaguered public reputation of the pharmaceutical industry, as the report claims company executives are aware of the situation but are unable to “crack down on the doctors they rely on for conducting patient testing.”
Senator Grassley has referred the matter to the Department of Justice and to the Securities and Exchange Commission, requesting an investigation into the findings, which he says “violates a trust that is fundamental to the integrity of both scientific research and financial markets.”
- Meanwhile, Senator Grassley has also issued a comment on recent moves by the pharmaceutical industry to self-regulate its direct-to-consumer advertising [[03/08/05b]]. In a statement, he said: “This announcement acknowledges the need for greater transparency when it comes to drug safety but doesn’t deliver a single guarantee for consumers. The US Food and Drug Administration needs to stop dragging its feet and start exercising its authority to closely monitor the marketing of pharmaceuticals. We need an updated law that requires drugmakers to submit their ads to the FDA for review. It doesn’t make sense to reply on drug companies to police themselves.”